Issues and unintended consequences concerning a state “free tuition” plan

An old expression goes, “if it sounds too good to be true, it probably is.” Governor Andrew Cuomo’s announcement last week proposing a free college tuition plan offers new opportunities for many families with incomes under $125,000. It also raises a number of concerns. There might be some unintended consequences if the plan is approved by the State Legislature.

There is no denying the appeal of a college student and his or her family being relieved of the burden of paying tuition. Draining family cash and diminished savings plus accumulated student debt impact most middle income families.

Cuomo’s proposed “Excelsior Scholarship” plan echoes the campaign proposals of Bernie Sanders and Hillary Clinton, although their proposals would have gone further in providing benefits. Cuomo received national attention for his plan, sparking rumors about a potential presidential run in 2020. That’s eons away right now. Who knows?

As a government numbers person, one of the first things I took note of was the suggested cost of the Cuomo plan compared with potential beneficiaries. Everything about this program is speculative at this time since there are currently no budget bills or memoranda to look at to allow an accurate analysis.

When the plan is fully operational in 2019 it is suggested that the total state cost would be $163 million. First reports suggested that about 900,000 middle income families and students might qualify. The number who might qualify and use the benefit was later worked down to approximately 200,000 students. With the lower participation rate the average benefit per student would only be about $800.

But the average per student benefit is irrelevant because of the way the plan will reportedly operate. A student would first, if eligible based on family income, need to apply for New York State’s Tuition Assistance Program (TAP) as well as for a federal Pell grant award, which is also based on income.

Currently TAP provides an annual grant limit of $5,165 for eligible students, with some restrictions on the number of semesters that the aid can be used for, plus a grade point average requirement. Pell grants top off at $5,815. Pell grants phase out at $50,000 of family income, while TAP provide some benefit for families earning up to $80,000; the minimum TAP grant at the higher income level is $500 per year.

Tuition at SUNY’s four-year colleges and universities is presently $6,470. That is, relatively speaking, a bargain considering that the national average in-state tuition is $9,650. Community college tuition varies among the various counties. Erie Community College’s tuition, which is among the highest in the state, is $4,733. Niagara County Community College charges $3,960.

A student who, on their own or from their family, has a lower annual income (generally less than $50,000) already has “free tuition” at a SUNY or CUNY four-year school or at a community college. Cuomo’s free tuition program, therefore, is mainly aimed at assisting middle income families and students who either do not qualify for TAP and Pell, or who only receive a very small amount of assistance from those plans. There is certainly nothing wrong with targeting the benefits, although the general public might have a different impression about who will benefit based on the way the free tuition plan is being promoted.

Wrapping a tuition subsidy around eligibility for TAP and Pell parallels the Say Yes program, which is offered to Buffalo students and to students in other cities. Say Yes SUNY and CUNY scholarships, however, do not factor family income into determining the award.

Tuition costs, of course, are only part of the total bill that a college student faces. Fees, books and room and board for those who live on or near campus are a big part of the total and are a major challenge for many students. Those expenses dwarf tuition costs at the public institutions.

The details of the Cuomo plan will become known when the State 2017-18 Budget is released in the near future. There are, at this point, a lot of questions that need resolving including how much it will really cost.

It seems logical that the program will cost a lot more than is being currently projected. Assume for the moment that just 20 percent (40,000) of the potentially eligible students qualify and sign up for the program and receive a complete tuition waiver. At the current SUNY tuition rate of $6,470, the total cost would be $258.8 million, or almost 60 percent more than the total cost Cuomo is projecting.

Since we would expect that the $163 million figure was not just plucked out of the air, the Cuomo staff must have some criteria in mind for the program that will limit the cost and the participation. The limits might include things like semester limitations or grade point average requirements.

Many students, particularly at community colleges, only attend part-time, generally because the students work. There will be no “free tuition” for part-timers under the Cuomo plan.

Consider also the impact of the free tuition program on the colleges themselves.

The revenue impact on the colleges from the plan will likely be limited. Substituting state money for student money to cover student tuition expenses adds nothing to the schools’ revenues.

Some SUNY and CUNY faculty and staff are concerned about campuses and courses becoming overloaded. A surge in enrollment at those institutions could also lead to new capital spending demands at the schools. If there is a surge in public campus enrollment the schools may not be able to handle the costs of additional programs, courses, staff and facilities unless the state then comes across with additional annual operating assistance.

The impact on SUNY schools may not be the same at both four-year locations and the system’s community colleges. One of the highly touted benefits of community colleges is the opportunity to save money by getting the first two years of a college program taken care of at a less expensive community college. But if tuition is no longer an issue students might gravitate to a four-year school with more program and course offerings and bigger and better facilities. Enrollment has already been falling at most community colleges in the state. The free tuition program might accelerate that movement.

New York is home to more than one hundred private colleges and universities, most of which are held in high regard and have been serving students for many, many years. Half of the total bachelor degrees awarded in the state each year are from these private schools. The Excelsior Scholarship will not be available to private college students.

Western New York is home to ten private colleges. They are all heavily dependent on tuition income for their continued operation. Many of them have struggled in recent years with the challenges of lower enrollment and increasing operating costs.

All the schools in Western New York, with the exception of SUNY Buffalo, draw a heavy majority of their students from Western New York. The population has been dropping or stagnant, meaning the flow of students from kindergarten up through college has diminished. Anything, therefore, that draws students in the area to public schools likely means reduced enrollments at the private colleges.

That means, therefore, that the Excelsior Scholarship program will increase financial pressures on the private institutions. That most certainly is not one of the intended goals of the free tuition project, but it is likely to be one of several unintended consequences of the plan. Hurting private colleges could in some ways hurt the state as much as the free tuition might help.

When you cut away the PR fluff from the Cuomo proposal and get past the image that “free tuition” conjures up, what you really have in the plan is an expansion of the state’s existing Tuition Assistance Program. If treated as such, students at private institutions would benefit by having their tuition expenses reduced too.

Unfortunately that would result in greatly increasing the costs of the Excelsior Scholarship program because of the high participation rate of private college students in TAP. The state already spends more than one billion dollars per year on TAP, and history has shown that even small increases in the maximum TAP award have been difficult to push through the State Legislature.

It has been suggested that the free tuition program is just designed to be part of a Cuomo progressive political agenda that might propel him onto the national stage for 2020. Standing alone, there are real benefits that would flow to thousands of New Yorkers from the plan. But the plan should be more than a 2020 political prop, because if poorly implemented it will backfire in many ways.

An ECC update

While on the subject of colleges, here are a couple notes related to past posts concerning Erie Community College:

  • Spring enrollment is wrapping up at the school, where classes resume next week. Reports indicate a drop in enrollment of about ten percent compared with the Spring semester of 2016. Dropping enrollment continues to add to the financial problems of the school.
  • Five months after President Jack Quinn announced his retirement the College Board of Trustees is finally getting ready to hire a search firm to find Quinn’s successor. SUNY guidelines for a presidential search suggest that the process usually takes six months, which means that the new president might not be in place until the summer, shortly before the 2017-18 academic year begins – assuming that the selected candidate does not have extended notice-to-current-employer matters to resolve. Those same SUNY guidelines also note that the costs for the search have been higher than $20,000 for both in-house and professional search firm expenses. We’ll see how that compares with the contract which ECC settles on.

2 thoughts on “Issues and unintended consequences concerning a state “free tuition” plan

  1. I think this is a good analysis but we shouldn’t be so worried about preserving private colleges as we should be more concerned about educating our children. A college education is as basic today as a high school diploma was in our day. A free public education through college is a step in the right direction. The private elementary schools survived and so will some of the private colleges. It isn’t the job of government to protect them. The overriding concern of government is to educate our children and young adults.


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